Somewhere on the line graph of historic dates in online poker, a timeline that covers such vital high points as Jan. 1, 1998 — when the first real-money site, Planet Poker, launched — and such low points as April 15, 2011 — a.k.a. “Black Friday” — you have to include May 1, 2018. That was the day on which, for the first time in the regulated U.S. online poker era, WSOP.com and 888poker combined their players in Nevada, New Jersey, and Delaware into one pool.
It was the first major step forward for what is known as “shared liquidity.”
And, more than 19 months later, it remains the only major step forward.
After May 1, 2018, the impact of shared poker liquidity became apparent immediately. In April ’18, PokerStars was the top site in New Jersey with $797k in revenue and Caesars, whose license WSOP and 888 use, was in third place with with $449k. One month later, Caesars was No. 1 with $770k in revenue. And it has remained No. 1 for all but one month (October ’18, when PokerStars ran its New Jersey Championship of Online Poker) since.
Poker, unlike table games, slots, video poker, or sports betting, all of which see gamblers take on the house, is a peer-to-peer game in which there is no game if there are no peers. Liquidity begets liquidity. Crowds attract crowds. In poker, whether live or online, the bigger the player pool, the better the games and the more game options there are to choose from. This is a fundamental rule of the poker ecosystem.
Now that regulated online poker exists in Pennsylvania, the potential for another historic date on the line graph exists. Will Pennsylvania, with its 12.8 mm residents — almost as many as New Jersey (8.9 mm), Nevada (3.1 mm), and Delaware (970k) combined — enable its poker players to enjoy the benefits of liquidity shared with other legal online poker states?
Hot start for ’Stars
PokerStars is off to a strong start in PA, since soft-launching Nov. 4 and becoming a round-the-clock option for players on Nov. 7. The site produced just shy of $2 mm in revenue in the partial month, and the traffic has been humming since day one, when more than 700 cash-game seats were filled at once during prime time. The first major tournament series on ’Stars in PA was so popular that the host was boosting guarantees throughout.
The success of PokerStars is making the case that shared liquidity is not essential for online poker to survive.
But it is essential if online poker is to truly thrive. Consider: On PokerStars in Pennsylvania, 1k players during peak hours is considered a healthy pool; on PokerStars in 2011, prior to Black Friday, when American players were pooled across all states and with numerous other countries, peak traffic exceeded 50k players.
“If online operators can’t share their customer bases across state lines,” PocketFives.com Senior Writer Jeff Walsh tells Penn Bets, “then those massive pre-Black Friday tournaments with thousands of players and six-figure payouts simply won’t be possible.”
The $300 buy-in PACOOP main event that began this past Sunday attracted 420 players, who contributed 220 re-buys to the prize pool. First place paid $31,335.64 — a decent chunk of change for two days’ work, to be sure. But it’s nothing compared to the global PokerStars World Championship of Online Poker, in which both first and second place in the 2019 main event cashed for more than $1 mm.
Single states, modest stakes
It’s all a matter of scale, of course. It’s a massive leap from sharing players in two, three, or four states to sharing players across every continent.
Evan Silverstein is a poker pro who mostly plays high-stakes pot-limit Omaha online. He’s originally from Pennsylvania, but doesn’t live there currently and hasn’t played in the state since PokerStars launched last month. He did play in New Jersey for about two years, from 2016-’18.
“New Jersey was a great proof of concept for online poker in the USA,” Silverstein says. “Games were good, and that was only with one state of about 9 mm people. Ultimately, high-stakes action was very hit or miss, and from what I’ve heard after leaving, it’s continued to die down. It was definitely a factor in my decision to not prioritize living in New Jersey — even as someone who played both hold ’em and PLO, there wasn’t enough action above mid-stakes for me. Many days and nights, I was sitting at every table of $5/$10 and up, but with no opponents.
“When I’ve looked at the lobbies in Pennsylvania,” he adds, “as someone who mostly plays $10/$20-$50/$100 PLO, there has been nothing for me.”
Indeed, at many hours of the day, it’s hard to find a game bigger than $5/$10 running on PokerStars in PA. While players from micro-stakes up to $1/$2 can easily find action in the single-state set-up, there isn’t much to entice pros or deeper-pocketed amateurs.
“Shared liquidity would open up an important opportunity for me, and could sway where I choose to locate, depending on which states are included,” Silverstein says. “Joining together with other medium/big states would be huge and I’d be really excited to try it out.”
One potential new addition to the mix is Michigan, where Gov. Gretchen Whitmer is poised to legalize online poker any moment. That would increase the combined population in poker states from about 26 mm to about 36 mm.
Notably, though, the final version of the Michigan legislation — in contrast with previous versions — does not require the Michigan Gaming Control Board to look into shared liquidity options. The state still could, and might, of course. But there’s no provision explicitly calling for it.
In Pennsylvania, shared liquidity “is permitted under the Gaming Expansion Act,” Pennsylvania Gaming Control Board Director of Communications Doug Harbach tells Penn Bets. “However, with only a single poker site up at this time, it is not something that is expected to occur soon.”
Why is that? “I believe,” Harbach responds, “the operators wish to make sure the iGaming market for Pennsylvanians is operating and gaining some maturity first.”
Whatever the timetable, PokerStars is definitely interested in pooling multiple states.
“We believe shared liquidity across regulated markets is a tremendous advantage to growing a healthy poker community,” says Matt Primeaux, president of FOX Bet (PokerStars’ sports betting counterpart), “which in turn contributes towards potential taxes for the state and to a stronger and more sustainable regulated online gaming industry. We have shared our position with the Pennsylvania Gaming Control Board.”
Harbach confirmed that the PGCB has indeed had “informal discussions” with PokerStars.
Wire Act complications
The rapidity with which eligible states are adopting shared liquidity has not been helped by the Department of Justice’s revised opinion on The Wire Act of 1961. Written last December, that reinterpretation called into question the legality of online gaming interactions across state lines.
This week, Deputy Attorney General Jeff Rosen kicked that can a little farther down the road, and while some are confident that interstate poker will ultimately be permitted, the temporary uncertainty seems to have state officials and poker operators tapping the brakes.
Assuming the Wire Act doesn’t gum up the works, the question is how many states does it take for the snowball effect to really kick in and make poker lobbies feel legitimately crowded?
“There are some who feel like Michigan’s population of 10 mm is that tipping point,” says Walsh. “But I feel like the closest thing to a tipping point would be California or even New York, as both states have a dense population of avid poker players.”
Like most in the industry, Silverstein agrees that the Golden State would be a game-changer — but it’s not the only non-east-coast state with that theoretical impact.
“One potential key in pooling is a state like Texas or California,” Silverstein says. “Not only are they extremely populous, but the time-zone difference helps establish a longer window of peak hours.”
A ‘value add’ for sports betting states
While nearly 20 states have passed sports betting legislation since the Supreme Court opened the door for that particular vertical in May 2018, online poker — available for states to regulate since 2012 — lags hopelessly behind.
Much of the rapid growth of sports betting has been fueled by the revenue numbers — and corresponding tax revenue — in the states that have it. Just as poker liquidity attracts poker players, poker money attracts legislatures. And they haven’t really been shown the money yet.
“I think the only thing that is really going to move the needle in convincing other states is money — how much does the state need it and how much can they make?” Walsh says. “In my opinion, it would take a significant amount of time before online poker, on its own, could be a motivating factor for lawmakers to put in the effort to legalize and regulate it.
“But if that potential revenue is a line item within a larger package as it was in Michigan, I think it’s a perfect ‘value add’ for those states already currently looking ahead to cash in on the sports betting movement. I feel like online poker is unlikely to ever really be in the front seat, driving the lawmakers to act. It will simply be a passenger on a larger iGaming offering.”
Agrees Silverstein, “Ultimately, poker is a drop in the bucket even for the operators. If you look at the revenue numbers, most of it comes from casino-style games rather than poker, and as time has gone on, the percentage of gambling revenue from online poker relative to other casino games has shrunk a lot.”
Silverstein says interest in poker has been declining for years, in part because it tends to require patience rather than offering the immediate thrills of games played against the house. But he does believe states like Pennsylvania and New Jersey sharing poker liquidity would go a long way toward reversing poker’s fate.
“It seems obvious to me,” Silverstein says, “that growing the player pool by a factor of ‘n’ would increase the action — and thus, revenue — by a factor greater than ‘n.’”
Until Pennsylvania gets in on liquidity sharing, though, operators will have to content themselves with modest revenues and players will have to accept limited game selection. Pennsylvania poker is not yet all that it can be — not even close.
But it’s a better option for players and produces more tax dollars than is currently the case in 46 American states.
“There are eager poker players in every state,” Walsh says. “They are ready and willing to play online, both as recreational players and grinders. So while the poker industry in the U.S. may never feel like the heyday of the poker boom again, there should be a game to be found at any time in any state where an online operator decides to launch.”
Photo by Shutterstock.com
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